China and Russia-led Eurasian Economic Union may set up free trade zone

China may establish a free trade zone with the Eurasian Economic Union (EEU) in the future, says the Russian Ambassador to China Andrey Denisov. It would make trade with Russia, Belarus, Kazakhstan, Armenia, and soon Kyrgyzstan tariff-free.

“At first the Chinese were cautious about the Eurasian Trade
Union; they just needed to make sure that it works. Now they are
increasingly showing interest in participation with the union,
not just with Kazakhstan, Belarus, Russia, Armenia, and
Kyrgyzstan on an individual basis, but with the union per
se,” Denisov told RIA in an interview published on Monday.

As far as I know they [the Chinese – Ed.] offered us, the members
of this Union –EEU – to think long-term about the creation of a
free trade zone. Well, this is probably the case, even if it’s
far off in the future.

The Eurasian Economic Union includes Russia, Armenia, Belarus and
Kazakhstan and was officially launched on January 1. Kyrgyzstan
has said it will join, with accession expected by the end of May.

The population of the union is about 171 million people, and its
gross domestic product is expected to reach $3 trillion in 2015.

Russia has been ramping up its economic ties to China over the
past year, more so after sanctions cut off trade and financing
opportunities with the West.

China is Russia’s second-biggest trading partner after the EU,
and trade between the two was worth $95.3 billion in 2014, a 6.8
percent increase since 2013, but still short of the $100 billion
goal.

China and Russia expect trade between the two neighbors to
reach $200 billion by 2020. More than 80
percent of trade is natural resources like oil, iron, timber,
machinery, and equipment.

A watershed in 2014 was the signing of a $400 billion gas
deal, as well as starting work on the ‘Power of Siberia’
pipeline, which will deliver 3 trillion cubic meters of gas to
China over 30 years.

Denisov said the high-speed rail links are “still just an
idea,” commenting on the report made on the Chinese version
of Twitter in January that a train would connect Moscow and
Beijing in just 48 hours.